EU green crisis: Brussels faces industry nightmare as steelmakers warn ‘we must act now’

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They are set to be overtaken by Asian rivals that don’t have to comply with similar rules imposed by Brussels. The pressure on firms to shrink their carbon footprint means they will face more competition from overseas steelmakers not impacted by the move to slash greenhouse gas emissions. European companies are adapting to the bloc’s Green Deal by purchasing costly electric furnaces powered by renewable energy sources.

Roland Junck, president of European and UK business group Liberty Steel, said: “The right way is to tackle the problem as early as possible — not to wait to be the last ones.

“The European steel industry has always said ‘our timeline is 2050,’ and that is motivated by a lot of capital expenditure … and fundamentally they use it as a defensive way not to do something.”

Campaigners have called for European steelmakers to rapidly adjust to the new climate-friendly realities in order to get a foothold on the international market.

Suzana Carp, a strategist at NGO Bellona Europa, told the Politico website: “Our winder to get our act together is no longer than three to five years, that’s it – after that we can call ourselves out of the race.

“Steel companies in China, which are the biggest competitors to the European ones, are moving, and if their emissions peak by 2023, Europe only has until 2023 to really get an early foot into green steel.”

China accounts for more than half of the world’s steel production, and is also considering plans to lower emissions.

The country’s Ministry of Information and Technology is preparing a five-year plan for all domestic steel mills to switch to electric furnaces and more environmentally friendly production methods, such as recycling more scrap.

China’s state-owned Baowu, the country’s largest steelmaker, has announced it will be carbon neutral by 2050.

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Japan’s Nippon Steel and South Korea’s Posco have also pledged to meet the same target by 2050.

According to 2019 figures, just 40 percent of the 160 million tons of crude steel produced in the EU came from electric arc furnaces.

Global steel production is under scrutiny because it is said to produce around nine percent of the world’s greenhouse gases.

Mr Junck has predicted that the shift to green production will hit steelmakers’ pockets.

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He estimated the it will cost around €1,000 per ton to convert to green steel.

“But even if you need, say €400 per ton, if you make a million tons of steel that’s already €400 million, and for a normal steel company with 10 million or 15 million tons of production, you are quickly at an additional €6 billion,” he said.

Ms Carp warned that European producers are willing to leave the steel markets because it is flooded with cheaper Asian imports.

Mr Junck added: “The additional pressure to make the green transition is actually motivating people to leave steel – of the three main producers in Europe, you have ArcelorMittal who is redesigning and continuously reducing its footprint then you have ThyssenKrupp who is willing to go out of steel, and you have Tata in Europe, also willing to go out of steel, so you have no real leader anymore.”

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Liberty is looking to upscale its production and happily adjust to green steel production.

It recently bought seven European mills from ArcelorMittal for €740 million in 2019.

The firm also took over operations at one of Poland’s largest steel mills as well as establishing facilities in France to produce the continent’s first recycled train rails.

Mr Junck said: “We want to take the leadership in this, and for that, we need a bigger size of steel business, which will give us the critical mass to be able to really move the European steel sector ahead.”

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